I have wanted to write a few news-streams to discuss with you the progress being made in the online advertising market.  This is a fascinating area of growth that impacts all of us because it is changing how marketers get to us, and the level of privacy we will have in the future.  I liken what is happening in this field to a silent explosion in that dramatic improvements and changes are happening all around us, but we really are not aware for the most part of what is happening.  Let’s take a step back and discuss the run up to where we are now, and then I can write a couple more posts about some of the more esoteric things going on.

In the beginning, there was the banner ad.  A company that I started was the main vendor for AOL as they grew up and we got paid tons of money over 4 years or so to develop the banner ads for AOL.  This meant that we learned by experimenting on the market: what colors to could and should use, how to build in animations to attract attention, and therefore what not to do as well.  It was a blast to be pioneering this first tool in Internet marketing business.  It was all about click through rates.  We lived and died by how many people clicked on the banners.  Man, have things ever changed.

From there, we quickly jumped to large systems that would track information on users by putting “cookies” on their computers.  Cookies are tiny little text files that look like gibberish to you and me, but the computer reads them and learns all about you on a particular site. So, we would know who the user was, or at least what they have clicked on in the past.  This allowed us to have an inventory of banner ads, and then we could drop something on the screen that would be interesting to a user – instead of the shotgun approach we had been using prior to this development.  Users at that time thought this type of targeted marketing was an invasion of privacy because we were storing information about them and using it to customize the advertising they would see.  Our argument was that we were doing them a favor because they only had to see banner ads that might be interesting – we saved them time in some way.

Wow, if they only knew how much their privacy was getting ready to be brokered.  Pretty soon companies that tracked user information and behavior were scouring the world for data on those users so that they could improve the ability of an advertiser to deliver targeted content.  This got so bad that a woman had a breast exam, was diagnosed with cancer, and started getting emails 2 days later from a support group.  Problem was, she had not told anyone about the diagnosis – no one.  So she researched how this information got out and found that the hospital was selling diagnoses to marketing companies.  This ushered in the era of HIPAA regulations.  All that aside, the era of targeted marketing was here.

Targeted marketing as a concept is brilliant, effective, and in many ways, actually does benefit the consumer.  Instead of running a TV commercial that is going to shotgun the general audience with products that might be specifically for a male or female, advertisers can now run ads that only I, as a male, might be interested in.  That is good for me.  Also the click through is higher.  The fine line here is that targeted marketing can be taken to an extreme.  How much information about me should an advertiser get to have?

For example, today I got a picture in my email from a friend that showed a streetview of my house from Google Streetview.  It showed my two cars in the driveway.  Google will certainly use this service to allow advertisers to place marketing geographically, and to let people “see” any place they choose directly from a computer anywhere in the world.  With just my name and an address (which any company can get) they now have the ability to see where I live in detail, what we drive, and even us walking around the yard if the timing is right.  The next step may be that Wal-mart starts selling the data on what products I buy.  They could do this today.  What if the utility company starts selling usage data, and information on when people move?  There is actually no end to data that is not restricted legally today that could be sold.

The bottom line is this: online marketing is quickly building a targeted model that is deep and robust.  They are doing this from the pieces of information they can gather on us.  This is a bigger list than  you think.  Next posting I will share with you some of the more interesting targeting marketing going on.

Scott Klososky
Scott@FPOV.org